Leveson-style inquiry into banking scandal rejected by MPs

DEMANDS for a Leveson-style inquiry into the banking scandal were rejected by MPs today.

Chancellor George Osborne speaks to the house on the banking crisis []

Labour had demanded that a full-legal inquiry into the culture and professional standards of the banking industry be made but MPs today voted against the move.

MPs voted by 320 to 239, a majority of 81 against the proposal.

Instead a parliamentary led inquiry is currently underway to look at the Libor rate-fixing scandal.

Downing Street said the proposed parliamentary inquiry would not conflict with possible criminal investigations into alleged manipulation of the Libor rate because the committee would not "replicate or duplicate" the work of regulators, but would address wider issues of the culture and ethics of the banking industry.

"The Opposition motion suggests a two-stage inquiry and the first stage is very much about the scandal of the manipulation of Libor," Mr Cameron's official spokesman told reporters.

"That is the issue that is still under investigation by the SFA and many other regulatory authorities. It would be difficult to look at lots of detail on that issue at the present time.

"Clearly, it is possible for an inquiry to consider the wider issues, such as the cultural issues, standards in banking and so on."

The proposed joint committee would be able to draw on the SFA report into Libor manipulation at Barclays and ask witnesses questions about it - just as the Treasury Committee did with Bob Diamond yesterday - said the spokesman. But the main focus of its work would not be to get to the bottom of who was to blame for specific wrong-doing in the case.

"The parliamentary inquiry would get into the wider issues of culture and standards in banking. It shouldn't replicate the work of the regulator," said the spokesman.

A separate review is being carried out by SFA managing director Martin Wheatley into whether or not there should be changes to the regulation of Libor, including the introduction of possible criminal sanctions.